EURUSD:

Weekly Timeframe: The EUR/USD weekly chart is almost too painful for the human eye. The ECB unveiled quantitative easing measures for the Eurozone on Thursday, consequently causing a further decline in value. The past three weeks have been quite dramatic with price consuming an ignored Quasimodo swap level at 1.1758, and also, more recently, a major weekly demand area at 1.1373-1.1617. This forced the pair to finish the week (1.1203) attacking a weekly Quasimodo support level coming in at 1.1109. A break below here would likely attract further selling down towards a major weekly demand area seen at 1.0760-1.0988.

Daily Timeframe: In a similar fashion to the weekly timeframe, the daily timeframe shows a break below the aforementioned weekly Quasimodo support level would likely inspire the sellers to continue pushing this market south towards a daily Quasimodo support level visible at 1.0780, which is conveniently located deep within the major weekly demand area mentioned above at 1.0760-1.0988.

Given the points made above, what can we expect from the Euro this week? From a technical perspective, this pair is in a great position to be looking for buy trades at the moment, with price currently dancing around a weekly Quasimodo support level at 1.1109. However, with the current state the Eurozone is in at the moment, buying right now may not be the best path to take, no matter how attractive the higher-timeframe technical picture looks.

This brings us to the next point – selling? Selling this pair would, again from a technical perspective go against our conservative nature as we usually avoid selling into higher-timeframe structures (see above). Nonetheless, with the Euro expected to continue declining in value, our team has come to a general consensus that we’ll primarily be focusing our energy on short trades (WITH confirmation) for the time being.

As we can all see, price closed the week just above the 1.2300 handle. This coupled with higher-timeframe support from the weekly Quasimodo level (level above), there may be enough buying pressure here to push the Euro higher to retest 1.1300, which with lower-timeframe confirmation; we’d be very interested in selling at. Failing that, a break below 1.1200 early on today would focus our attention on 1.1200 for possible retesting opportunities down to 1.1100.

Current buy/sell levels:

Buy orders: Flat (Predicative stop-loss orders seen at: N/A).

Sell orders: watching for lower-timeframe confirmation around the 1.1300 area (Predicative stop-loss orders seen at: dependent on where one confirms this level).

GBP/USD:

Weekly Timeframe: As we can all see, the GBP continued to spiral south last week as prices were pushed deeper into a major weekly demand area at 1.4812-1.5097. For anyone currently holding on to longs here, the future does not look too promising, as price also closed below a weekly trendline formed from the low 1.4225 (17/05/14), which in all likelihood could spark further selling into this week.

Daily Timeframe: The ECB’s press conference on Thursday likely stimulated the recent sell off on the GBP, which consequently forced prices to trade below a daily Quasimodo support area at 1.5007-1.5097. As a result, further selling was seen on Friday bringing price into contact with a major daily demand area visible at 1.4812-1.4949 (located deep within the aforementioned weekly demand area). This area of demand is particularly significant for two reasons:

It is effectively the last line of defense for the current weekly demand area (see above).

It was also the origin of a year-long uptrend beginning on the 10/07/13.

4hr Timeframe: Friday’s trading action saw price oscillating between three levels/areas – the huge round-number 1.5000, the ignored 4hr supply area at 1.4979-1.4935 (located just within the aforementioned major daily demand area), and a small 4hr swap level coming in at 1.5033.

From a technical standpoint, longs are slightly more favorable at the moment according to higher-timeframe demand (see above). However, this pair has been in a decline since mid-2014, and is showing no signs of stopping yet. On top of that, we mustn’t forget that price recently closed below a weekly trendline level (see above) as well.

With all of the above taken into consideration, we have decided that selling this pair will only be permitted once price consumes the weekly demand area at 1.4812-1.5097. Buying on the other hand, will only be permitted once/if price closes above the small aforementioned 4hr swap level, as this will likely clear the path north up to the 1.5100. If this does indeed occur, we’ll be watching for price to retrace/fakeout back down towards 1.5000, where at which point we’d begin watching the lower timeframes for buying confirmation (as per the blue arrows).

Current buy/sell levels:

Buy orders: Flat Predicative stop-loss orders are seen at: N/A).

Sell orders: Flat (Predicative stop-loss orders are seen at: N/A).

AUD/USD:

Weekly Timeframe: Last week was clearly a fantastic week for anyone short the Aussie Dollar, as the pair declined a cool 320 pips from the underside of a recently broken descending channel (limits can be found at 0.9556 – 21/10/13 … 0.8846 – 05/08/13). This move consequently saw price consume a weekly demand area at 0.8064-0.8460, and at the same time attack another weekly demand area coming in at 0.7699-0.7974 forcing the market to close at 0.7897.

Daily Timeframe: As a consequence of the recent sell off, the daily timeframe reveals that prices broke below a daily demand area seen at 0.7958-0.8070. This has likely opened the gates for prices to challenge a daily Quasimodo support area coming in at 0.7699-0.7834 (located deep within the weekly demand area mentioned above at 0.7699-0.7974). It will be interesting to see what the 4hr timeframe has to say about this…

4hr Timeframe: As we can all see the rebound from the ignored 4hr Quasimodo level at 0.8126 recently extended lower, breaking below both the 4hr Quasimodo support level at 0.8034, and the round-number 0.8000. This subsequently encouraged follow-through selling during Friday’s trading sessions, forcing the Aussie a further south into 0.7900.

Let’s quickly recap, just to make sure that we’re all on the same page here. The weekly chart shows price is firmly trading within weekly demand at the moment, while the daily timeframe indicates that there is still room to the downside, deeper within the weekly demand area (see above). So, where does this leave the 4hr timeframe in the overall scheme of things? It’s quite simple really. Price can either break and retest 0.7900 and attempt to reach 0.7800 (located just within the daily Quasimodo support area mentioned above at 0.7699-0.7834), or rally higher from 0.7900 back up to 0.8000.

On the whole, buying from 0.7900 would require some very sexy lower-timeframe confirmation for us to even consider this as an option. By the same token, a break below and retest of 0.7900 would again require confirmation from the lower-timeframes – first take-profit target for this trade would be around the 0.7835 mark, seen just above the aforementioned daily Quasimodo support area, and potentially, with enough time, the 0.7800 handle.

The reason for confirmation here is simply because (as most of you are already aware), psychological numbers such as these are prone to fakeouts which can lead to unnecessary stop outs.

Current buy/sell levels:

Buy orders: currently watching for lower-timeframe confirmation around the 0.7900 area (Predicative stop-loss orders seen at: dependent on where one confirms this level).

Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/JPY:

Weekly Timeframe: Last week saw very little action on the USD/JPY pair, which as a result formed a weekly inside bar. Should traders take this as a valid bullish signal considering that price is currently hovering above a major swap level seen at 115.50?

Daily Timeframe: Little change was seen on the daily timeframe last week as the market still remains capped between a small daily supply area coming in at 119.95-119.14, and a daily demand area seen at 115.55-116.38.

4hr Timeframe: The 4hr timeframe shows that the buyers and sellers spent last week conducting business between a 4hr supply area seen at 118.84-118.52, and a 4hr demand area at 116.91-117.22.

Therefore with all of the above taken into consideration, we can see that the weekly timeframe is trading just above a weekly swap level, and has printed a potential bullish signal (inside-bar candle pattern). The daily timeframe on the other hand shows that in order for this bullish signal to ‘work’, price would have to take out a near-term supply area (see above for levels). With this in mind, we believe there to be two options for any bulls out there:

Trade within the current 4hr range from the aforementioned 4hr demand area (tentative buy orders are seen just above at 117.25). This is clearly a respected zone, and will likely react again. However, caution is advised here, we personally would only take a trade with lower-timeframe confirmation, since fakeouts are so very common within consolidative areas such as here.

The second option is a more conservative one, and would likely require patience. One would have to wait for price to close above the small 4hr supply area coming in at 119.31-119.12 (located just within the daily supply area mentioned above at 119.95-119.14). This will be the cue to begin looking for fresh longs as the path then would likely be clear up to a nice-looking 4hr supply area sitting at 120.73-120.39.

The approach to selling this market is a little different as we mustn’t forget that price is currently trading about a major weekly swap level (see above). Does this mean that selling is out of the question? Absolutely not. Areas to watch for selling action are as follows:

The 4hr supply area at 118.84-118.52, which forms the upper limit of the current 4hr range. Entering short at around 118.47 is a valid sell. But one that (in our opinion) requires confirmation.

The 4hr supply area that was just mentioned at 119.31-119.12 (tentative sell orders are seen just below at 119.08). This area is effectively the last line of defense for the aforementioned daily supply area. Again, we would only consider shorts here with corresponding lower-timeframe confirmation.

USD/CAD:

Weekly Timeframe: The weekly timeframe shows that the buyers recently conquered yet another key weekly swap level seen at 1.2260 last week, forcing the market to close near its highs at 1.2412. This move has potentially opened the gates for prices to challenge a major weekly Quasimodo resistance level seen at 1.2765.

Daily Timeframe: Last week’s action saw the market absolutely obliterate a daily supply area at 1.2265-1.2162. This in turn saw the market continue north towards another daily supply area coming in at 1.2504-1.2385. For the USD/CAD pair to continue rallying this week, this daily supply area will need to be consumed. In the event that there are willing sellers located here, prices may be forced back down to retest the weekly swap level mentioned above at 1.2260.

4hr Timeframe: Last week’s volatility began to simmer down going into Thursday and Friday’s sessions, as price attacked 1.2400. The rather messy action around 1.2400 likely saw the majority of sellers stopped out, and most of the breakout buyers trapped.

So, with the weekly timeframe indicating that direction is likely north, and the daily timeframe currently showing price dancing within supply (see above for levels) at the moment, where does this leave the 4hr timeframe?

The choppy price action around 1.2400 seen late last week may be a vital clue as to where price may trade today and possibly into tomorrow. In our opinion, price is showing that small pockets of demand have likely been consumed, notice how when price saw a small rally, it spiked lower to fill unfilled buy orders, thus potentially clearing the path south (depicted with a small red trendline). Therefore, assuming there are indeed sellers located within the daily supply area mentioned above at 1.2504-1.2385, this may be enough to push the market south towards the 1.2300 handle. But, that’s not all. Lurking just below here is the weekly swap level that was just recently broken at 1.2260. So, between 1.2300 and 1.2260 we now have a strong base to watch for confirmed buying opportunities (green area). In addition to this, we have added support from the ascending channel line which was recently broken (now acting support), this forming a highly confluent area, which a lot of traders are likely going to be watching.

DAX 30:

Weekly Timeframe: Last week shows that the German index saw an increase in value as price advanced to a new high of 10707, consequently closing above a long-term weekly trendline level formed from the high 7437 (14/02/11).

Daily Timeframe: The daily timeframe shows just how far price closed above the aforementioned weekly trendline resistance. In the event that buyers can hold out above here, we could potentially see further buying this week. It will be interesting to see what the 4hr timeframe has to say about this.

4hr Timeframe: As we already know, last week’s price movements closed just above a long-term weekly trendline level (see above), and has very likely opened the gates to much higher prices. So, where does this leave us on the 4hr timeframe?

We see price doing one of two things this week:

The DAX may decline and see a reaction from the weekly trendline level as acting support. Lower-timeframe confirmation is a must (for us) if one plans to enter long here around the 10565 mark, as there is really very little below stopping prices from breaking this level.

Price could break below the weekly trendline level and continue south towards either the ascending channel (what is now) support (9126 – 17/11/14, 10084 – 04/12/14), or the 4hr decision-point demand area seen at 10228-10302 (located just within a daily decision-point demand area at 10148-10273).

Current buy/sell levels:

Buy orders: 10565 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).

Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

DOW 30:

Weekly Timeframe: The weekly timeframe shows that for seven consecutive weeks price has been hovering above an ignored weekly Quasimodo level at 17135. In the event that this level fails, follow-through selling will likely be seen down towards a weekly support level coming in at 16051.

Daily Timeframe: The daily timeframe shows that the DOW is currently in a consolidation phase between a daily swap level coming in at 17896, and a daily demand area seen at 17032-17186. What is more, notice the symmetrical triangle forming, this tells us that something may be brewing and it could be explosive.

4hr Timeframe: Friday’s trading action shows that price reacted beautifully from a 4hr supply area visible at 17934-17855, forcing the market to close on its lows at 17649.

We know from our higher-timeframe analysis that price is currently trading above an ignored weekly Quasimodo level, and that the daily timeframe shows price is effectively consolidating for the time being (see above). Does anyone smell accumulation here? We mentioned that something could be brewing in the daily timeframe analysis, and that it could be explosive. Considering that price is trading above a major weekly level at the moment, it would make sense for a move north to take place, right?

Therefore, given the points made above, our bias is currently long on the DOW. As such, the small 4hr swap level at 17606 (tentative buy orders are seen just above at 17615) could be an area to watch for buying activity this week. By the same token, the 4hr decision-point demand area sitting at 17397-17492 (tentative buy orders seen just above at 17502) could also be another. When or indeed if prices reach these areas, we would not comfortable entering blindly with buy limit orders; lower-timeframe confirmation is a must for both of these areas. The reason being is simply because swap levels tend to see fakeouts regularly and the 4hr decision-point demand area has already been visited once already at 17478 on the 22/01/15, thus potentially weakening the buying strength within this area.

XAU/USD (Gold):

Weekly Timeframe: Last week shows that Gold broke above a weekly supply area at 1296.3-1269.3, which as a result leaves the weekly supply area seen at 1391.9-1328.0 clearly in the limelight for the time being.

Daily Timeframe: The daily timeframe shows that after price broke above the weekly supply area mentioned above at 1296.3-1269.3 on Tuesday; hesitation was clearly seen in the Gold market. Price began consolidating between a small daily decision-point demand area at 1271.9-1281.3 (this was likely where pro money made the decision to break above the aforementioned weekly demand area), and a daily supply area above at 1319.2-1308.6. As long as the buyers can hold out above the daily decision-point demand area, we see very little reason why prices will not attack the aforementioned daily supply area this week sometime.

4hr Timeframe: For the best part of last week, the buyers and sellers were seen battling for position between a 4hr swap level seen above at 1305.2, and a 4hr swap level coming in just below at 1280.0.

Therefore, given all the points made above, where do we think Gold will trade next? Well, we currently have direction north on the weekly timeframe, meanwhile the daily timeframe shows that as long as the daily decision-point demand area holds, we can likely expect higher prices (for levels see above). Where does this leave the 4hr timeframe? As we already know, price is currently witnessing consolidative action (levels above), and as such we see tentative buy orders at 1281.7 (lower limit of the range), and likewise, tentative sells at 1303.7 (upper limit). We will personally not be trading the upper limit level here due to what the higher timeframes are telling us at the moment (see above).

For anyone considering trading this range, do remain vigilant to the fact that price could indeed fakeout here. A fakeout above 1305.2 would likely force the market towards a minor, yet very fresh 4hr supply area coming in at 1315.0-1311.2 (located within the daily supply area mentioned above at 1319.2-1308.6), and similarly, a fakeout below 1280.0 would likely see the market test a 4hr decision-point demand area at 1271.9-1277.1 (located within the daily decision-point demand area mentioned above at 1271.9-1281.3). As such, we would recommend not entering here blindly with a limit order and hoping for the best, waiting for lower-timeframe confirmation is (in our opinion) by far the best path to take.

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